Banks based in the District of Columbia are planning a new drive to obtain government apporval for regional branching.
In addition, the District of Columbia Bankers Association has proposed establishment in Washington of a new branch of the Federal Reserve Bank of Richmond to provide direct services for commercial banking in a growing metropolitan region.
K. Donald Menefee, who today was elected new president of the bankers at the conclusion of their 59th annual convention here, said in an interview that area-wide banking is necessary if local financial institutions are to experience real growth in the future.
The city itself is "pretty well banked" with more than 15 commercial banks, a similar number of savings and loan associations and dozens of credit union offices. But the major financial institutions are prohibited from establishing full branch services in the growing Washington suburbs of Maryland and Northern Virginia.
Several attempts over the past decade to remove branching barriers have been opposed by suburban financial insitutions and federal Iegislators. This has prevented the growth of large banks that would compete in the nationwide money markets on an equal footing with banks from such cities as New York, Los Angeles, San Francisco and other cities similar in size to Washington.
Menefee said the arrical of electronic funds transfer in recent years and the projected growth of computerized banking in a future "checkless society" provide a strong technical rationale for regional banking.
"These machines will enable banks to serve customers wherever they are," he said. And Menefee forecasts that bankers in Virginia and Maryland will be more receptive now to the idea of branching across state lines.
Menefee said the D.C. bankers will propose reciprocal branching rules that would permit Maryland and Virginia institutions to enter the D.C. market while Washington banks open up branches in the suburbs.
There is a "strong possibility" that many of these moves would involve acquisition and mergers among banks based in the area or holding companies in such cities as Baltimore, Richmond, Norfolk and Roanoke, he added.
The drive to locate a Federal Reserve branch in Washington is based on the "role of the District as the nation's capital and an international financial center," he said. "It should be a major money market location."
Washington is the nation's eighth largest urban area but the only one of several dozen lacking a local Federal Reserve branch.
Outgoing association president Joseph H. Riley noted that, during the past year, some services performed for commercial banks by the Treasury Department were "drastically curtailed," with many operations being transferred to the Baltimore branch of the Richmond Federal Reserve starting in August.
"We feel this is a situation that we cannot live with, and have begun to seek ways to have a Federal Reserve branch to serve this large metropolitan area," Riley stated. The Richmond bank is one of 12 regional branches of the nation's central bank.
Bankers here said negotiations or adding the Washington branch are in the progress, but George C. Rankin, first vice president of the Richmond Federal Reserve Bank, declined to comment on the D. C. bankers' appeal.
Menefee, who earlier this year was elected president and chief executive of Madison National Bank, said he hopes his colleagues will play a "much more active role" in the D.C. community over the next year.
And Douglas R. Smith, chairman of National Savings and Trust Co., urged his colleagues to establish a local political action fund to collect money for legal contributions to national candidates through the American-Bankers Association and to local government candidates "who are our friends."
But, while Menefee and others this week emphasized the need for more local involvement of bankers, it was obvious that broader issues affecting commercial bankers all across the country are perhaps the major concern of the District's bankers as well.
Many of the industry leaders here said they believe government eventually will permit the type of regional banking sought by the D.C. association. Indeed, there is a widespread expectation that nationwide banking will come to America eventually. They said the key to long-term survival will be the rules under which they must compete for customers and funds with other financial institutions - mainly savings and loan associations and credit unions.
According to Riley, the two most pressing issues are interest on checking account deposits and Federal Reserve membership. "It all boils down to one thing; fair treatment for bank customers and banks. We bankers want to be able to pay our customers the same rates of interest available at other financial institutions. And we also want to avoid imposing on our customers the added costs of unequal deserved requirements, service restrictions, regulation and taxation," he asserted.
Behind that statement is a new consensus among the bankers that legislation soon will be enacted by Congress - perhaps next year - to bring about interest-bearing checking accounts for individual consumers, the so-called NOW accounts (for negotiable orders of withdrawal).
Vincent C. Burke Jr., chairman of Riggs National Bank, said he has an "affirmative" view of the approaching NOW accounts. "As commercial bankers, (we) want to give our customers what they want. It would seem our customers want NOW accounts. . . All we want to insure is that our customers are treated the same as those of other institutions" which have been chipping away at the traditional restrictions on thrift institution and credit unions powers.
For example, savings and loans now have the authority to offer pre-authorized bill paying services, and many in the Washington area now are doing so or are making plans to offer such services. The S&Ls and mutual saving banks also offer telephone transfers from savings to checking accounts, and thrift institutions or credit unions in many states now may establish remote tellers.
As for checking accounts, S&Ls in 8 states, savings banks in 11 states and credit unions in 6 states now have authority to offer this service. NOW accounts are offered by banks and savings and loan associations in the 6 New England states.
A week ago, the Carter administration offered legislation incorporating much of the thinking expressed by bank industry leadership at a significant meeting this spring, in which the American Bankers Association reversed its earlier opposition to major legislative changes affecting financial institutions and proposed new rules that would emphasize "parity" among all financial companies.
The new interest-bearing checking account would be for consumers onlyand would be offered as an alternative to existing accounwhich would continue without interest. The interest rate paid on NOW accounts would be less than the bank passbook and the rate for new accounts would be the same for all financial institutions, established by a committee of federal regulators, under the industry proposal.
In addition to Carter proposal, a separate bill drafted by the Bankers Association was introduced, and four other bills proposed by the S&Ls, credit unions and mortgage bankers have been offered. The Senate Financial Institutions Supervision Subcommittee, headed by Sen. Thomas J. Mclntyre (D-N.H.), will consider all six bills in legislative hearing scheduled to begin Monday.
Locally, in addition to area-wide branching and the Federal Reserve situation, district bankers this week emphasized their concern that the city's economic helath depends on construction of a downtown convention center.
A native Washingtonian, Menefee is a graduate of Eastern High School and Benjamin Franklin University. He began his banking career at the former Munsey Trust Co. in 1953 and helped organize the Madison Bank in 1963.
Other officers elected today were first vice president Charles D. Daniel, president of Union First National Bank; second vice president Dale. L Jernberg, executive vice president of National Bank of Washington; and treasurer John E. Sumter Jr., vice Chairman of AmericanSecurity Bank.